Currencies | Jul 30 2013
By Chris Tedder, Research Analyst FOREX.com
The Aussie was hit hard today on the back of disappointing building approvals data and some dovish rhetoric from RBA Governor Stevens. The sell-off in the commodity currency was enough to send AUDUSD through 0.9100, and may even be enough to send the pair to a major support zone around 0.9000 overnight.
Australia’s June building approvals fell 6.9% from a month earlier, completely missing an expected 2.0% rise. Also, May’s figure was revised down to a 4.3% decline from a 1.1% drop. The bad data is compounded by the fact that Australia’s housing market is one of the only bright spots in the economy, so any indications that it isn’t as strong as the market expects is very concerning.
Later in the session Stevens quashed fears that Australia’s slightly better than expected underlying Q2 inflation figures would prevent the RBA from cutting the official cash rate. The Governor said the Q2 inflation data retains the bank’s scope to ease. He added that the decline in the Australian dollar makes sense from a macroeconomic perspective, something we have been saying for a while, and it may decline even further, while also saying that prior rate cuts were working but not so much as to impede further easing. Overall, the tone of the RBA Governor was very dovish and supports our case for a rate cut.
JPY weakness was quickly outmatched by AUD weakness, sending AUDJPY to a support zone around 88.90 – 2013 low. A break here may pave the way for a prolonged sell-off. This theory is supported by a bearish crossover in daily MACD (see chart).
Support
89.00-88.90 – 2013 low and prior resistance
87.50 – December 2012 support
86.45 – prior resistance
Resistance
91.15
93.10
93.55 – 200day SMA
Technical limitations
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